Quote:
Originally Posted by anyonebutedmonton
Understood, but those interest payments that are deductible are real costs. As in, they are actually paid to the bank. They reduce net income because they actually flow out to third-party creditors.
The depreciation claimed would be in respect of depreciable assets, which would not include the land. I don’t see how the financing structure comes into play in this respect.
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Some questions on this, because it seems sketchy. The properties have to be used for business and you only get to claim the value of the structure and not the land, correct? You have to be able to prove they are for business purposes, yes? In the example suggested, the individual gets to claim a deduction of $370K for 27 years, meaning the entire cost of the property is recouped in that time ($370K x 27 = $9.9M). Then the interest gets to be written off as a business expense, so at today's rates that would be $6.7M on a 30 year mortgage, or $224K a year? So without any revenue generation the property has has a tax avoidance value of $594K in the first year with a light drop each subsequent year? The mortgage on the full $10M is only $609K a year. That can't be right.